The company currently relies on a third-party carrier to deliver its frozen lobster rolls to different parts of thecountry. In order to streamline the storing and delivery of frozen lobster rolls that are ready to be shipped tocustomers, senior management plans to invest $3,000,000.00 to build a distribution center next year in thePortland suburbs. The book value of the distribution center will be depreciated over thirty (30) years.Assuming sales revenue and other costs remain the same next year, help Olivia and her supervisor determineA. How the distribution center's depreciation expense will affect the gross margin of both products if thecompany continues to use the traditional costing system.B. How the distribution center's depreciation expense will affect the product margin of both products if thecompany decides to use the activity-based costing system instead of the traditional costing system. Mainely LobsterIncome StatementYear Ended December 31, 2021Sales$2,160,000Cost of Goods Sold$640,000$192,000$320,000Direct MaterialsDirect LaborManufacturing OverheadTotal Cost of Goods Sold1,152.000Gross Margin1,008,000Selling and Administrative ExpensesVariable Selling expensesFixed Selling expensesTotal administrative expensesTotal Selling and Administrative Expenses224,000250,000160.000634,000Net Operating Income$ 374,000

Marginal Costing is a traditional costing system. It focuses…

Answered: currently relie s on a thırd-party…

Business

Accounting

currently relie s on a thırd-party carrier to deliver its frozen lobster o different narts of the

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter2: Job Order Costing

Section: Chapter Questions

Problem 6BE: Cost of goods sold Pine Creek Company completed 200,000 units during the year at a cost of...

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Question

The company currently relies on a third-party carrier to deliver its frozen lobster rolls to different parts of the
country. In order to streamline the storing and delivery of frozen lobster rolls that are ready to be shipped to
customers, senior management plans to invest $3,000,000.00 to build a distribution center next year in the
Portland suburbs. The book value of the distribution center will be depreciated over thirty (30) years.
Assuming sales revenue and other costs remain the same next year, help Olivia and her supervisor determine
A. How the distribution center's depreciation expense will affect the gross margin of both products if the
company continues to use the traditional costing system.
B. How the distribution center's depreciation expense will affect the product margin of both products if the
company decides to use the activity-based costing system instead of the traditional costing system.

Mainely Lobster
Income Statement
Year Ended December 31, 2021
Sales
$2,160,000
Cost of Goods Sold
$640,000
$192,000
$320,000
Direct Materials
Direct Labor
Manufacturing Overhead
Total Cost of Goods Sold
1,152.000
Gross Margin
1,008,000
Selling and Administrative Expenses
Variable Selling expenses
Fixed Selling expenses
Total administrative expenses
Total Selling and Administrative Expenses
224,000
250,000
160.000
634,000
Net Operating Income
$ 374,000

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